Brazil Business Confidence

Brazil: Business confidence retreats for the first time this year

June 27, 2012

In June, the business confidence index published by the Getulio Vargas Foundation (FGV, Fundacao Getulio Vargas) decreased a seasonally adjusted 0.2% over the previous month to 103.2 points, which represented the first decline so far this year. The reading reflected a fall in the expectations index, whereas the present situation index rose over the previous month. The index still sits close to the 100-point threshold, indicating relatively subdued optimism levels. Moreover, business confidence remains well below the post-crisis peak of 116.5 points recorded in March 2010. Subdued confidence in the business community is likely to weigh on investment growth going forward.

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At its 6 December meeting, the Central Bank’s Monetary Policy Committee (COPOM, Comité de Politica Monetaria) decided to cut the benchmark SELIC interest rate by 50 basis points, a smaller cut than at its previous meeting.